MAHARASHTRA VALUE ADDED TAX (MVAT)

Nisha Santiago 97 Parin Shah 98 Preeti Someshwar 99 Priyanka Oza 100 Raghavendra Nayak 101 Rahul West 102

What is VAT

First initiated in Brazil Levied on multiple stages of production

Levied on sale of goods including intangible goods

Substitute for sales tax ie BST 1959

Pre MVAT- Bombay Sales tax Act1959

Problem with double taxation

MVAT was introduced in 2005

What type of Businesses are liable

Importer Manufacturer Distributors Wholesalers Retailers Work contractors

Features of MVAT

A single law to incorporate laws to sales tax, works contract and transfer of right to use goods Uniformity in rates of taxes with other states Composition schemes for small businessmen Exemption for Agriculture sales and goods used in agriculture Tax benefit on stock held on 31.03.2005 Credit for tax paid on purchase on and from

Time bound refund Separate return for different dealers Simple self-assessment Audit Benefits given to exempt unit continued Harsh criminal penalties

Registration under VAT

Existing Dealers
Dealers registered under Bombay Sales Tax Act 1959 Dealers under The Maharashtra Sales Tax on Transfer of Right to Use any Goods for any Purpose Act, 1985 and The Maharashtra Sales Tax on Transfer of Property in Goods involved in execution of Works Contract [Reenacted] Act, 1989

New Dealers Dealers seeking Voluntary registration

Effective Date of registration

New Businesses Existing Businesses Voluntary Registration Late Registration

Benefits of registered Dealer

As a registered dealer, they are entitled to: collect VAT on the sales; claim set-off of tax (input tax credit) paid on purchases;

Issue tax invoices and, be competitive.

Rates of Tax Under MVAT

Two main rates i.e 4% & 12.5%.
The goods are grouped into five schedules as under: Schedule Rate of tax Illustrative Items.
A B C 0% Vegetables, milk, eggs, bread 1% Precious metals and precious stones and their jewellery 4% Raw materials, notified industrial inputs, notified information technology products and a few essential items

D
E

20% and above Liquor, petrol, diesel etc

12.5% Other than items specified in schedules A, B, C & D.

Difference between tax free goods and exempt sales

Tax free goods do not attract tax at any stage of sale or in any type of transaction, whereas, exempted sales are certain types of transactions, viz., export sales which are exempt from tax.

Sales exempt under VAT

Following sales are exempt under Maharashtra Value Added Tax Act, 2002: Sales in course of import or export of goods. Sales in course of inter-state trade or commerce or outside the State/Union Territory. Turnover of sales below Rs. 5 lacs during a year Sales exempted by Government in public interest, known as tax free goods. Works contract executed outside the State.

Special Cases
Auctioneers If dealer is an auctioneer, then they must include in their turnover, the price of the goods they auction for their principal Hotels There are special rules for hotels and other establishments that provide boarding and lodging for an inclusive amount.

Special Cases
Works contracts VAT applies only to the sale of goods. Supply of services is not liable to VAT. Works contracts are deemed sales where both, goods and services are provided in a transaction and cannot be separated. A works contract may involve the creation of immoveable property, e.g. a house, a factory or a bridge.

Advantages of VAT

Simplicity

Under VAT system, there are only a few tax rates

Adjustment of tax paid on purchased goods Further such adjustment The amount of tax would be known at each and every stage of goods of sale or purchase. There is uniformity in tax rates across the states.

Adjustment of Tax

Transparency

Fair & Equitable

Advantages of VAT

Procedural Simplification

Procedural simplification relating to assessment, appeals, revision and proceedings review minimized discretion with assessing officers so that similarly placed persons are treated alike

Minimizing Discretion

Computerization
helps to focus on tax evaders by generating exception reports management information system

THANK YOU.